Certified Payroll Professional Practice Exam

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Prepare for the Certified Payroll Professional Exam with comprehensive flashcards and multiple choice questions. Each question is accompanied by detailed hints and explanations to aid your understanding. Get ready to ace your Certified Payroll Professional Exam!

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Which tool can employers use to determine the federal tax to withhold based on an employee's gross wage and allowances claimed?

IRS Calculator
Wage Bracket
Percentage Method
Tax Bracket Table

The correct answer is: Percentage Method

Employers can use the Percentage Method to determine the federal tax to withhold based on an employee's gross wage and allowances claimed. The Percentage Method calculates the tax amount by applying a specific percentage to the employee's taxable wages, taking into consideration the employee's filing status and allowances. This method is commonly used and provides a straightforward way to calculate federal tax withholding accurately. The other options are not the most appropriate tools for this specific purpose: - The IRS Calculator is a useful tool for individuals to estimate their tax liability but may not be the most efficient method for employers to calculate withholding for each employee. - The Wage Bracket method involves using pre-determined tables based on the employee's filing status and pay frequency to find the appropriate withholding amount. While it can be effective for certain situations, the Percentage Method offers more flexibility and accuracy. - The Tax Bracket Table provides information on tax rates based on income levels but may not be as practical for calculating withholding amounts on individual paychecks as the Percentage Method.